Avoiding the Extremes in Health Care

Conservatives try to lump any government action involving health care together as “socialized medicine.” Similarly they act as if European programs all fall under this label. In reality there are a wide range of plans used around the world and a wide variety of plans discussed in the United States. At one extreme there are totally government run plans as in the United Kingdom. Canada has a single payer plan where the government has replaced private insurance as the primary payer, giving the government a tremendous amount of control over health care. Other countries have a combination of government and private insurance.

While most Democratic politicians support such a mixed approach, it seems that the bulk of economically liberal bloggers are supporting a single payer plan. Therefore I was a surprised to see Ezra Klein’s op-ed in The Los Angles Times in which he described problems of single payer plans and supported a more mixed approach:

Britain and Canada control costs in a very specific fashion: The government sets a budget for how much will be spent on healthcare that year, and the system figures out how to spend that much and no more. One of the ways the British and Canadians save money is to punt elective surgeries to a lower priority level. A 2001 survey by the policy journal “Health Affairs” found that 38% of Britons and 27% of Canadians reported waiting four months or more for elective surgery. Among Americans, that number was only 5%. Score one of us!

Well, sort of. American healthcare controls costs in another way. Rather than deciding as a society how much will be spent in the coming year and then figuring out how best to spend it, we abdicate collective responsibility and let individuals fend for themselves. So although Britain and Canada have decided that no one will go without, even if some must occasionally wait, the U.S. has decided that most of those who can’t afford care simply won’t get it…

Moreover, surveys conducted by the Organization for Economic Cooperation and Development have found that most countries don’t have waiting lines or the uninsured. Not Germany or France or Japan or Sweden, all of which have more of a mix of public and private options. But Canada is next door, and Britain speaks our language, so we tend to spend a lot of time comparing our system with these systems and not a lot of time thinking through the full range of options.

In light of the “Health Affairs” data, smugness about our speedy access to care seems a bit peculiar. If someone can’t afford care, we record their waiting time as zero. You don’t wait for what you can’t have. But a more accurate accounting would record that wait as infinite, or it would record when the patient eventually ends up in the emergency room because the original ailment went untreated. Research like this raises a simple question: Would you rather wait four months for a surgery or be unable to get it altogether?

Just last week, House Republicans expressed their preference for the latter. Their long-awaited budget document was admirably specific about changes to Medicare. They call for “a new Medicare program” in which enrollees are given a check “equal to 100% of the Medicare benefit,” which they can then take to the private market to purchase their own care.

This proposal has a purpose beyond dismantling a popular government entitlement program. Currently, Medicare does not abide by a budget. It is not run like the Canadian or British healthcare systems. Instead, it pays whatever is deemed “reasonable and necessary.” Because of that, costs are shooting through the roof: The Congressional Budget Office estimates that Medicare spending will more than triple by 2050.

The Republican plan gives Medicare a budget. Costs grow only as fast as the check grows. And because the check grows more slowly than health spending does, the program saves money. But this is, in effect, almost precisely the strategy of Britain and Canada: It is the government imposing an arbitrary budget on its healthcare spending.

The difference is that the British and Canadian governments try to apportion that health spending so that the whole population gets care. That can mean, alongside other cost-saving measures, longer waits for services. The Republican budget simply would give individuals a fixed check. That will mean that patients who exceed that sum and don’t have money of their own go without needed care.

So Americans will continue to brag that no one waits, and Canadians and Britons will continue to brag that no one goes without. And somewhere, the French and the Germans and the Japanese and the Swiss and many others will wonder why we insist on choosing between such awful extremes.

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3 Comments

  1. 1
    Eclectic Radical says:

    It is worth noting that in some of the countries noted in the quoted article (France and Germany, possibly others), even the ‘private’ health care is run on a non-profit basis. The only income goal of ‘private carriers’ is to meet their expenditures on care and hospitals and clinics only need to meet operating costs. This reduces consumer health care costs dramatically without requiring cutback in services.

    Some Republicans (Mitt Romney, while governor of Massachusetts, where a similar plan passed, comes to mind) have championed an unfunded insurance mandate loosely based on the French and German systems, but without the non-profit clause or regulation of minimum standards of care. Such a mandate would not be noticeably better than our current system, because it would not remove the basic problem of American health care: the necessity to collect as much money as possible while providing as little care as possible in order to make a profit.

  2. 2
    bruno says:

    In other words….  Maybe, as is suggested with the Financial Industry, we need to make it less glamorous.   Take away the exorbitant compensation, and we may experience an more reasonable financial industry as well as health care industry.

    Of course Health Care industry also encompasses the Pharmaceutical companies who claim that if their CEO’s don’t get multi million dollar bonuses no more new drugs will ever be invented again – forever.   They don’t use those exact words, but that’s pretty much what it comes down to.

    There aren’t too many pundits who acknowledge that the dreaded bureaucrats also work in Private Insurance companies.   Conservatives seem to believe that only government bureaucrats are bad, but that the adjuster at an insurance company has your best interest in mind at all times.

    Why else would we have to call our insurance company for pre-authorization?   Personally, if I have to,  I’d rather call the government.  At least I can be assured that they have a reasonable payscale for their compensation.  That their compensation doesn’t go up because they were able to deny me service.   I’d also be assured that the Secretary (CEO) of that department will not be making more than the President of the United States.

  3. 3
    Eclectic Radical says:

    I’m not sure, right now, if a slower rate of ‘invention’ in the pharmaceutical business wouldn’t be a better idea anyway. Right now many of the ‘new drugs’ are old drugs with minor changes to re-patent them as the old patents lapse. A massive amount of drugs to treat ED and allergies are matched by relatively little real progress (with some notable exceptions in a few specific areas) on cancer or heart disease. Massive amounts of preventative drugs intended for healthy patients, with possibly dangerous side effects, have been shoved into the market as well. There was a time when potentially deadly side effects were considered to be a legitimate risk only for treatments for the most life threatening ailments. Now potentially deadly side effects are a legitimate risk to treat restless leg syndrome.

    CEO’s do not invent new medications and claims that executive compensation is tied to the success of medical research is… questionable at best, if not laughable.

    Pharmaceutical companies must be dealt with from both ends, both as part of comprehensive drug policy reform and as comprehensive health care reform. They are on the short list of trusts most in need of busting, like the media, the oil industry and the auto industry they have become a virtual cartel.

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